Kingfisher plc is an international home improvement company with over 2,000 stores. They operate in eight countries across Europe under retail banners including B&Q, Castorama, Brico Dépôt, Screwfix, TradePoint and Koçtaş, offering home improvement products and services to consumers and trade professionals who shop in their stores and via their e-commerce channels.

19 Mar 2025

Home attraction; cyclical upside; cash rewards

Kingfisher is an industry-leading home improvement retailer that is primed, ready for a recovery in “big-ticket” spending.

We review management’s strategy to grow sales and profit margins in the medium term. We believe that Kingfisher’s resilience in the UK is due to the successful execution of its expansion strategy into trade, online and smaller stores (among other things). By serving more customers, in more convenient ways, Kingfisher has grown UK market share and we anticipate the roll out of these initiatives will drive market share gains in France and Poland too.

Over the next three years we forecast c.40% growth in Adj. PBT and our upside scenario analysis suggests 90% potential growth. Whilst investors wait for this, we forecast a 10%+ FCF yield and substantial cash returns. Hence, trading on only c.10x cal 2026 PER, we see scope for a significant re-rating from this point in the economic cycle.

We initiate coverage with a 340p Fair Value based on 12.5x cal 2026 PER and c.3.5% dividend yield.

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